Severance agreements, when offered, are given to the employee under frequently chaotic circumstances. Terminations often come as a surprise to the employee being fired, and being fired can be an emotionally and financially difficult time for the employee. Adding to this difficulty, employers typically require that severance agreements (if one is offered at all) be accepted and signed by the employee in a relatively short period of time.
How long do I have to accept a severance agreement?
In short, the severance agreement itself will state how long the employee has to accept whatever severance package is offered by the employer. Accepting is typically accomplished by signing the severance agreement and returning it to the employer by email.
Because of a federal age discrimination law, most severance agreements will give the employee twenty-one (21) days to accept the agreement. (29 CFR § 1625.22 (d).) However, since age discrimination only protects employees that are age 40 and older, employers will sometimes put a much shorter time period for younger workers, such as seven days.
What if I need more time to think about it?
If the employee needs more time to think over the terms of a proposed severance agreement, the employee should politely ask the employer to extend the stated time period. If the employer agrees, this should be confirmed with a follow-up email. This can be a risky move for the employee if the employer views the extension request as a rejection of the employer’s offer.
What is the seven day revocation period all about?
Some severance agreements will contain a paragraph that says even if a severance agreement is signed by the employee, the employee has a period of seven days to change his or her mind and revoke their acceptance. This, again, is due to a federal age discrimination law that mandates how age discrimination claims can be voluntarily waived or released. Age discrimination waivers are not legally viewed as voluntarily unless seven-day revocation is allowed. (29 CFR § 1625.22 (e).)
The employee’s revocation, if exercised, is typically done by emailing the employer as specified in the severance agreement itself. If the employee does not revoke the agreement, the severance agreement takes effect on the eighth day after the severance agreement is signed.
As a practical matter, the underlying employee will not want to have to rely on the seven-day revocation period, and should make a firm decision within the specified time period.
Doesn’t a 45-day deadline apply?
Some severance agreements have a forty-five (45) day deadline. This, once again, is because of a federal law intending to protect employees affected by a mass lay off, legally called a “group termination.” Although mass layoffs do occur, 21-day severance agreements are far more common.
What should I do If I am given a severance agreement?
The employee should not delay taking substantive action when a severance agreement is offered. This includes reading and understanding the requirements of the severance agreement itself, and most importantly, understanding the appropriate value of the severance agreement. Employees should strongly consider hiring an attorney for a one-time consultation to review the severance agreement and determine the potential value of any potential legal claims. This can be surprisingly affordable for the employee.
If the employee decides to negotiate for a larger severance agreement, the employee must budget for adequate time to do this before the expiration date of the severance agreement.
Have you been given a severance agreement? Contact the Law Office of Brian Mathias for a consultation today.